How to Become a Wholesaler, Distributor

How To Become A Wholesaler

In this article I will try to answer the question, how to become a wholesaler and present the basic information you will needed to become a wholesaler. Becoming a wholesaler is a great way to make money as a power seller with a full time job or part-time working from home. Whether you just want to supplement your current income or create a multimillion pound business, an online wholesale business could be just what you need to succeed.

What is a Merchant Wholesaler?

A merchant wholesaler or generally just wholesaler is the middleman who purchases products in bulk from manufacturers at highly competitive prices. The wholesaler then marks the price up enough to make a decent profit and sells the products, usually in reduced quantities, to retailers.

• Merchant wholesalers are sometimes referred to as distributors or jobbers.

As a wholesaler you aim is to buy in bulk so you can resell to your customers in smaller quantities. Most small retailers don’t want to buy in large quantities. For example, the wholesaler may buy goods in quantities of 1000, but sell them to retailers in quantities of 10 or less. By purchasing in bulk, you get lower prices and can mark-up the price to make a profit.

What are Brokers?

Brokers are very similar to wholesalers. They essentially act as middlemen between the manufacturer and the retailer, but they do not usually take possession of the goods, which sets them apart from more traditional wholesalers.

Brokers act on a commission basis and work for clients in the manufacturing business. These brokers then go out and make the best deals possible with various retailers who might be interested in the types of products their client sells. Often these brokers will continue to make a steady commission on further deals between the client and the retailer even if they are not directly involved in the transactions.

• Brokers are sometimes called commission merchants.

Future of Wholesale

Before the age of the Internet and increased global communication, wholesalers were necessary for product distribution to retail establishments. Wholesalers allow both manufacturers and retailers to keep their own costs down (in terms of distribution and warehouse storage), thus creating the opportunity for lower priced merchandise.

Due to changing technology, the Internet and global competition, wholesalers have been forced to change their business models dramatically with many taking on the role of dropshippers.

Instructions: How to Become a Wholesaler

Start-up Capital

Do you have the necessary start-up capital for a wholesale business? The amount of start-up capital necessary will be highly dependent on what you choose to sell. Selling men’s ties and belts could be accomplished with a modest amount of capital. If selling Aston Martin cars, I think you will need a little more capitol!

Wholesale Location!

Decide where you will run your business from. If working from home do you have enough storage space for the items you will be trading, or will you need to rent or buy secure warehousing?

Get a Wholesalers Licence.

Depending on your countries laws, you may need to obtain a license before you can become a wholesaler and operate a wholesale business. Check with your local town council or city hall to find out what license or licenses you will need to become a wholesaler, if any.

Register for Tax

Get your tax ID number. Most companies will not trade with you if you are not registered for tax purposes. In the UK you will need a VAT registration number. If you’re importing from overseas, Hong Kong, etc. they probably don’t care. One of the nice things about registering for VAT is that is shows you are a valid business and improves your standing in the business community.

Get a Business Bank Account

Once again, most companies will not trade with you if you do not have a business bank account. Just think about it. Would you trade thousands of pounds worth of products with someone who wanted to pay you in cash or with a postal order?

Get Products to Sell

Decide in which niche you are going to trade. Then decide what products you will sell within that niche. Now search the Internet for information about those products and potential suppliers of the products. You need to learn as much as possible about the niche and the products you plan to sell, because knowledge is power (and power is profit).

• You need to know in what quantities the products will sell, at what price and the profits you can potentially make.
• If you don’t do your market research first, you’ll end up with boxes full of things that will never sell.

Good research will help you become a wholesaler with better sales and increased profits.

Negotiation Skills

The field of wholesale distribution is a true buying and selling game. You will require excellent negotiation skills, a nose for sniffing out the next “hot” item in your particular niche, and really keen salesmanship.

If you don’t have these skills then I suggest you get a good book on salesmanship and negotiation and start practicing. Get an item to sell and go on a cold-calling spree. When you’ve acquired the necessary sales and “people skills” you’re ready for the wholesale business.

Research Trade Shows

If possible attend as many trade shows in your niche as you can. Get to know the vendors. Ask them what kind of deals you could make. Don’t be shy, you’re both in business to make money by helping each other. Always leave a business card so they can contact you later to discuss the deal further.

Contact Companies Direct

Contact the companies you would like to trade with. Tell them you’d like to become a wholesaler of their products and ask for their terms and conditions. Then, actually read them. Take note of minimum volume requirements.

Get storage facilities

Wholesalers buy in bulk from manufacturers so require large, secure, warehouses. If you don’t have these facilities, where will you store the products? Don’t forget about insurance both for the products and the storage facilities.

Tips & Warnings

• If you do decide to become a wholesaler and buy in bulk, make sure you have a place to store the products until you have sold them and don’t forget to get insurance.
• When starting out, buy items with a long shelf life. Don’t buy “the-in-thing”, if you don’t sell them quickly, you may never sell them.
• Don’t overdo it when buying inventory.
• Before you become a wholesaler, it’s imperative you research your customers needs before investing in inventory.
• Try to sell the product before you have to pay for it.
• Watch out for scams, particularly if you decide to go down the dropshipping route first. Research the companies thoroughly before making your final decision.
• If you’ve never been in the wholesale for retail trade, I strongly suggest you work for someone in the trade so you can gain experience.
• If you need my recommendations for suppliers just follow the link. You’ll see the results of my research so far.